Whereas, proponents of full credit reporting also seek to preempt the authority of the states to regulate the credit reporting and collection practices of gas and electric utilities; and
Whereas, proponents argue as a justification for full credit reporting that it helps low-income and other households establish a credit history and thus improve their access to credit; and
Whereas, although proponents further claim that full credit reporting “can direct markets toward a faster alleviation of poverty in this country,” the research used to support this claim focuses narrowly on the fact that a number of consumers who cannot presently be “scored” could be scored with full credit reporting, and thus gain access to credit, but without considering the broader realities that low-income and some other households commonly face in seeking to meet their energy needs and their financial responsibilities and without considering the broader realities that low credit scores pose for low-income and some other households; and
Whereas, in actuality, for reasons stated in part in this resolution, full credit reporting poses a new and profound threat to the well-being of both low-income consumers and a wide swath of consumers who are not low income but who for reasons including illness and layoff are not always able to make gas and electric payments on time; and
Whereas, credit scores are widely used by creditors and insurance companies to make decisions regarding the provision and pricing of their services, by prospective employers to make decisions regarding the hiring of employees, and by prospective landlords to make decisions regarding the leasing of residential property; and
Whereas, the financial difficulties faced by consumers in paying gas and electric bills on time have been exacerbated in recent years by deep recession and high unemployment; and
Whereas, a single late payment report adversely affects a credit score by 60 to 110 points; and
Whereas, at the present time, the vast majority of gas and electric utilities have a practice of limiting credit reporting to seriously delinquent accounts which have been terminated and referred to a collection agency or written off as uncollectible; and
Whereas, the present practice of limited credit reporting appropriately reflects and advances, while full credit reporting would inhibit and thwart, a host of public laws and policies that the states have implemented and embraced as a part of the safety net for their people, including laws and policies concerning billing, collections, security deposits, termination practices and customer service activities, and including such vital protections as winter moratorium on disconnection of service for low-income consumers and mandatory alternative payment plans on certain accounts that are not current;
NOW THEREFORE, BE IT RESOLVED, that NASUCA opposes full credit reporting on residential gas and electric accounts and urges state and federal policy-makers to prohibit the practice.
BE IT FURTHER RESOLVED, that NASUCA supports the continuation of full state legislative and regulatory jurisdictional authority over gas and electric billing, collection, customer service and credit reporting activities, including but not limited to the reporting of customer payment history to credit reporting agencies; and
BE IT FURTHER RESOLVED, that NASUCA urges, should a state authorize credit reporting on residential gas and electric accounts, that the authorization be limited to the reporting of seriously delinquent accounts which have been terminated and referred to a collection agency or written off as uncollectible; and
BE IT FURTHER RESOLVED, that NASUCA urges, should a state authorize full credit reporting on residential gas and electric accounts, that the authorization, consistently with the stated purpose of full credit reporting to help establish a consumer’s credit history and improve the consumer’s access to credit, be subject a consumer “opt-in” requirement.
NASUCA Gas Committee and NASUCA Consumer Protection Committee
Approved June 15, 2010
San Francisco, CA
The Political and Economic Research Council (PERC at www.infopolicy.org
), the Center for Financial Services Innovation (CFSI at www.cfinnovation.com
), and the Corporation for Enterprise Development (CFED at www.cred.org
) seek support for and amendments to the Fair Credit Reporting Act (FCRA) to allow for “full credit reporting.” See CFSI News Release, “CFSI, PERC, and CFED seek your support of an Alternative Data Initiative,” July 2009 (http://www.cfsinnovation.com/news/article/330637
); PERC, “NCLC Supports the ‘3 Ps’ of Lending: Pawn Shops, Predatory Lenders, and Pay Day Lenders” (http://perc.net/files/alt_data_dis_paper1.pdf
Turner, Varghese, Walker and Dusek, Political and Economic Research Council, “Credit Reporting Customer Payment Data: Impact on Customer Payment Behavior and Furnisher Costs and Benefits” (March 2009) (http://perc.net/files/bizcase_0.pdf).
Turner, Lee, Schnare, Varghese, Walker, Political and Economic Research Council and Brookings Institution Urban Markets Initiative, “Give Credit Where Credit Is Due” (2006) (http://perc.net/files/downloads/alt_data.pdf
Simon, “FICO reveals how common credit mistakes affect scores” (November 13, 2009) http://www.creditcards.com/credit-card-news/fico-credit-score-points-mistakes-1270.php
Varghese and others, note 3 above, p. 12.